State College council to vote Monday on budget, proposed tax hike

State College Borough Council will decide Monday whether to go along with one member’s last-minute push to avoid a tax increase in 2014.

Council is expected to vote Monday on a proposed budget that carries a property tax increase of 1.5 mills. But Councilman Jim Rosenberger suggested last week that he would make a motion instead to put off the increase and dig deeper into reserve funds to balance the spending plan.

Rosenberger said he hadn’t seen enough at a series of budget discussions to be convinced that the borough needs to raises taxes in 2014.

Borough Manager Tom Fountaine said that the budget could be modified to include no tax increase and still be passed Monday. Council wouldn’t have to start the process over or hold additional meetings.

Never miss a local story.

Sign up today for unlimited digital access to our website, apps, the digital newspaper and more.

The tax increase in the current proposed budget would generate an estimated $678,000 in new revenue, Fountaine said. The average State College homeowner, with a property value of $200,000, would pay $7 more per month, according to the borough’s calculations.

Fountaine said that if council decides to avoid the increase and use reserve funds, the borough would have to spend roughly half of the funds in its $645,000 pension reserve account.

He said the money couldn’t come solely from borough’s general fund reserve, because that account must contain the equivalent of 12 percent of the borough’s annual expenses.

At a council meeting last week, Fountaine cautioned against digging deeper into savings and said it could have consequences in 2015 and beyond.

“There are sufficient reserves, but you’ll be bleeding the reserves dry,” Fountaine said. “Then you’ll be looking at 2015 increases that may be more significant.”

Rosenberger expressed concern about passing more costs on to property owners and, in turn, renters, in light of new housing projects being constructed outside the borough.

“It’s good for the borough not to be seen as an excessively high-cost area,” he said. “Housing is being built everywhere around us. ... What we don’t want is forces (working) against the borough as a preferred place to live.”

Rosenberger said the additional money could be used to balance the budget this year, avoiding a tax increase and without cutting any services.

“We have millions in these funds earning almost zero,” he said.

Rosenberger’s plan drew mixed comments from council members at the meeting.

Councilman Peter Morris said the idea is one that should have been broached earlier in the process.

“It seems a little late in the game to be asking (that) question of staff,” he said. “It’s reasonable to ask at some point, but that would have been a month ago.”

Councilman Ron Filippelli said, however, that if the borough can avoid cutting services and passing on a tax increase, it should be explored.

The spending plan as proposed features few changes that came about during the review process, but one addition is good news for a downtown institution.

The proposed budget now calls for a $10,000 donation to the State Theatre, up from $2,000 in early budget talks.

Filippelli previously proposed increasing the State Theatre contribution based on a letter he received indicating that it’s in “serious financial trouble.”

“Any little bit that we can do to indicate our support would be, probably, welcome,” he said.

While State Theatre Director Richard Biever agreed with that, he said there’s nothing in particular that has happened recently and that the doors won’t be padlocked anytime soon. However, the organization is pushing for donations to lessen its debt load — about $800,000 from renovations and a line of credit.